Renewable Avoided Cost
The “avoided cost” value of renewable power is lower than our retail rate. This is due to the natural intermittency of solar and wind and the mismatch between renewable peak power and our early morning winter peaks and late afternoon summer peaks.
Because renewable energy may not be available during peak periods, your cooperative has to provide for the generation capacity and energy for those peak periods from other sources. For example, when solar energy is available mid-day, the resulting savings or “avoided cost” of solar energy is the avoided fuel cost and the avoided variable operations and maintenance cost from other generation sources.
In summary, the value of electricity varies throughout the day. It is most valuable during peak periods, which is early morning during winter and late afternoon during both summer and winter. It is less valuable in the middle of the day and least valuable in the middle of the night, which explains the value associated with avoided cost.
After careful consideration, RushShelby Energy has established compensation levels for consumer-owned
renewable energy that ensures equity for all member-consumers. It is important that compensation be fair to
both those who choose to interconnect a distributed generation device and those who do not. The payment
structure is a modified net metering approach as seen below.
- The member-consumer avoids paying retail rate for any energy produced and consumed.
- Energy that is produced and returned to the grid is compensated at an avoided cost rate.